Samsung’s revelation that it is developing 5G multi-gigabit wireless technology in the 28GHz band has thrown a bombshell into an already contentious debate over the future of the spectrum band in Australia—with the current holdings of AAPT and NBN Co scheduled to come up for renewal within months.
Satellite players are already coveting the band, and CommsDay can reveal that incumbent AAPT is planning metro fixed wireless coverage using the same frequency; the additional prospect of next-generation mobile services there can only pile on additional pressure.
As Samsung said in its statement, there have been some reservations around the use of millimetre-wave Ka bands such as 28GHz for cellular communications; their propagation characteristics were not thought suitable for transmitting data over long distances. Samsung, though, says it has deployed adaptive array transceiver technologies – using 64 antenna elements – to counter these drawbacks and access the potential of the bands to provide wider spectrum channels.
“Samsung plans to accelerate the research and development of 5G mobile communications technologies, including adaptive array transceiver at the millimetre-wave bands, to commercialize those technologies by 2020,’ said the firm. “Once commercialised, 5G mobile communications technology will be capable of ultra-high-speed data transmission up to several hundred times faster than even the 4G LTE-Advanced technology due for launch later this year.”
AUSTRALIAN SPECTRUM CLASH: There is already a debate escalating in Australia over 28GHz in the short to medium term – and Samsung’s news is only likely to add an extra dimension to that showdown. AAPT snapped up all spectrum in the band (defined in Australia as 27.5-28.35GHz), together with 300MHz in 31GHz, for A$66.2 million in a 1999 auction. That gave AAPT national coverage in both bands on a 15-year spectrum license basis; Telstra and Optus were both prohibited from acquiring any spectrum in either band. That spectrum was originally earmarked for the deployment of local multipoint distribution services.
But LMDS never saw the level of adoption that had been expected, and AAPT kept hold of all its winnings until early 2012, when it sold some of its 28GHz holdings to NBN Co for the latter’s satellite services at an undisclosed price – primarily (and logically) in rural and regional areas. AAPT retained all of its 31GHz spectrum.
Both sets of licenses are due to expire in January next year, and the Australian Communications and Media Authority is currently in the middle of a review of the two bands. Coming from the start point that both are currently under-utilised, the ACMA’s preliminary view is that a reversion to 5-year apparatus licensing for both bands – albeit with an emphasis on continuity of service for current spectrum licensees – will “best accommodate the range of technologies that are likely to be high-value of uses of the 28GHz band… [and] may better allow for the introduction of technologies in the 31GHz band as and when demand for those technologies emerges.”
AAPT VS SATELLITE PLAYERS: AAPT, though, has argued for a hybrid approach: it is happy to see 31GHz licenses and some 28GHz licenses revert to apparatus licensing, but wants to retain three contiguous bands of 112MHz each within 28GHz under a spectrum licensing regime, in metro areas only. To date, the firm has remained tight-lipped about its plans for those 112MHz bands – but CEO David Yuile filled CommsDay in on the detail.
“We saw a resurgence of interest [in 28GHz] about 2-3 years ago, initially around using it for backhaul for mobile networks,” he said. “We saw a lot of technology development around meshing and point-to-multipoint; and we started to get excited, because we saw that you could potentially get 500Mbps to 1Gbps over these multi-point links… we saw enough evidence that we decided to actually resubmit; to renew the spectrum with a view that there’s significant potential in it.”
“We never saw it as a mobile network… we saw it as a fixed wireless service… to provide fixed wireless backhaul [or other network elements] with huge capacity,” added Yuile. One of the key advantages, he said, would be that the point-to-point technology could obviate the cost-prohibitive planning overheads required for individual links. “We saw the potential for non-planned networks; you put up a canopy from a central point, and you can have lots of points join it from anywhere within that canopy…. it’d almost self-heal, and self-[configure].”
But that would require the contiguous blocks of spectrum that AAPT wants to retain – and, said Yuile, a move from spectrum licenses to fixed point-to-point apparatus licenses would doom the project. “When you’re talking high volume, high density areas, the cost of that planning is horrible… for every link you wanted to run to somebody’s house or business, you’d have to go to the ACMA and submit for an apparatus license… after making sure that nobody else was using it,” he said. “There’s enough room in the 28GHz band in Australia to have apparatus, and a clear band for this [as well].”
Yuile says that Samsung’s announcement won’t change his intention to hand over the rest of AAPT’s metro spectrum for apparatus licensing. “Because of the timing around the spectrum, we saw the technology coming, but we didn’t know from whom or where!” he said. But he does face stiff opposition from satellite operators including NewSat, Inmarsat and SES.
All of them have argued that the current spectrum licensing of 28 and 31GHz has the effect of segmenting the internationally allocated Ka band, making it difficult to find contiguous bandwidth there – problematic in context of a sharp increase in the number of Ka-band satellites planned and deployed worldwide, as satellite operators seek to increase bandwidth. Each has called for the 28GHz band, in particular, to be shifted to an apparatus licensing regime across all Australia – without geographic exceptions.
“This would allow the band to be used by earth stations and fixed systems on a first come-first served basis, meeting the immediate needs of Inmarsat and offering maximum flexibility to all terrestrial and satellite applications to make use of this bandwidth,” said Inmarsat in a recent submission. Even Telstra has chimed in to support an Australia-wide shift to apparatus licensing.
What remains to be seen is how the prospect of 28GHz 5G plays into the clash in the wake of Samsung’s announcement. That will partly depend on exactly how Samsung defines the 28GHz band it used in trials; the band is defined differently by the ACMA in Australia than by Europe and the ITU, for example. It will also depend on whether mobile players like Optus and Telstra are allowed to acquire any spectrum in the band next time around – which could create more tension with satellite players.
Still, next-generation mobile broadband in the band is already on the regulator’s radar. “Higher radiofrequency ranges are being looked at and considered by the international radiocommunications community for use by mobile broadband applications. Australia is involved in this process through the ITU-Radiocommunication Sector work,” an ACMA spokesman told CommsDay. “These considerations are for long term planning arrangements – to which we note that the Samsung technology may be commercialised around the year 2020 so also a long term consideration.”
Malcolm Turnbull has a point about FTTN. Copper is showing itself to be more resilient than many would have you believe. Copper is more than cable of delivering speeds up to 100 Mbps on a fibre to the node network, if vectoring is applied. That’s the claim on this week’s podcast from Stefaan Vanhastel, a Director in Alcatel Lucent’s Fixed Networks Division, based in Belgium.
In Australia, iiNet, through their acquisition of TransAct are the only operators of a VDSL network. John Lindsay, their CTO, says he expects it will increase speeds on parts of their network by as much as 50 percent.
Meanwhile, what’s required to deliver common applications, like video, is decreasing. John Maizels, Governor at Large (great title!) at SMPTE (Society of Motion Picture and Television Engineers) says the h.265 codec will deliver a better picture than its predecessor, with half the bandwidth requirement.
The moral in this tale? Technology is a moving feast. That surely makes a nonsense of any approach to prescribe a technology over any time period – particularly over eight years or more.
Australia’s 4G spectrum auction has shattered expectations around the value of the 700MHz spectrum under the hammer. Just two-thirds of the 90MHz of low-band ‘digital dividend’ spectrum on offer was purchased; combined with a sold-out auction for a larger slice of the much cheaper 2.5GHz band, that netted the federal coffers some A$1.96 billion – around A$1 billion shy of the government’s target.
Some commentators were quick to blame communications minister Stephen Conroy for the shortfall, largely because of his personal intervention to set a steep reserve price for the 700MHz lots. But the outcome also reflects a complex interplay of other factors, including VHA’s decision to walk away from the auction completely; evolving priorities for both Optus and Telstra; and signs of a global shift in the relative values of high- and low-band spectrum, as commercial LTE networks start to gain traction.
The final result saw Telstra come out with the bulk of both 700MHz and 2.5GHz, with a total of 40MHz (20MHz paired) and 80MHz (40MHz paired) respectively, shelling out A$1.3 billion at “close to the reserve price.” Optus snapped up a total of 20MHz in 800MHz and 40MHz, likewise paired, spending A$649 million – again reflecting the reserve price. The surprise minor winner was TPG, which ventured A$13.5 million to grab a total 20MHz of paired spectrum in the 2.5GHz band. VHA, having withdrawn completely from the auction process, came away with nothing.
First in the firing line for the billion-dollar shortfall – which, unless the leftover spectrum can be shifted quicker than the minister himself has indicated, will directly impact the federal budget – was Conroy.
Early commentary noted the Minister’s decision to intervene last December to set the reserve price for 700MHz at a hefty A$1.36/MHz/pop, which Optus at the time branded “unworkable and out of line with international outcomes,” and suggested that the minister might have shot himself in the foot by pricing too high in a bid to help achieve a federal budget surplus, just before the government abandoned that particular objective.
CARRIER CONTEXT: But Conroy’s reserve price intervention, and a concurrent tweak to the competition limits, came after Vodafone told him it would not be participating in the 700MHz auction – radically shaking up the competitive structure of the process.
With CEO Bill Morrow fighting to reverse the carrier’s ailing fortunes, and a costly network upgrade already underway, VHA had more pressing capex priorities.
Even Telstra, by far the biggest spender at auction, splashed out for less than the maximum 50MHz (2x25MHz) in the700MHz band that it could have bid for under the new competition limits. And CommsDay understands that the reason for the telco aiming below the limits was simply that it believed 2x20MHz would suffice for its currently forecast need in 700MHz.
As executive director for networks and access technologies Mike Wright explained, Telstra’s 700MHz winnings will help it cover long distances for better rural coverage and also improve in-building penetration. On the other hand, the slice of 2.5GHz that Telstra bought will cater for growth, beefing up its capacity to tackle ongoing mobile data growth.
The firm had previously felt itself a little short in the higher-band spectrum stakes, but Wright told CommsDay that post-auction, Telstra was now comfortable on capacity compared to the rest of the field.
Optus, for its part, spent well short of the limit in grabbing just 2x10MHz in the 700MHz band; the company is strongly focused on shoring up capacity against the ongoing mobile data boom, and thus on higher-band spectrum. The SingTel subsidiary already has substantial assets in the 2.3GHz band, via its 2012 buyout of Vividwireless, which it will use for TD-LTE; additionally, it has yet to publicly announce plans for the 3.5GHz spectrum which also used to belong to Vividwireless.
“The spectrum Optus has acquired [at auction] in the 700 MHz band will provide stronger 4G coverage across both metropolitan and regional Australia, allowing us to expand our 4G services to more customers than ever before,” said Optus chief country officer and Consumer Australia CEO Kevin Russell. “The additional spectrum purchased in the 2.5 GHz band, when combined with our already substantial holdings in 2.3 GHz, will enable Optus to provide unparalleled network capacity for 4G data services to our metropolitan customers.”
GLOBAL SHIFT: The increasing emphasis on higher-band spectrum for LTE, offering the capacity to cope with forecast mobile data demand growth, resonates with some of the trends emerging elsewhere in the world. In the UK’s spectrum auctions, concluded three months ago, none of the winning bidders emerged with more than 2x5MHz in that jurisdiction’s low band, 800MHz – but several shelled out for larger lots of both paired and unpaired spectrum in 2.6GHz. And in the US, Verizon, which launched commercial LTE late in 2010, stumped up US$3.9 billion last year for higher-band ‘AWS’ spectrum from a consortium of cable operators – but actually sold a set of 700MHz licenses to competitor AT&T this January for US$1.9 billion.
With these examples taken in context of the Australian results, it seems the price premium for low-band spectrum may have become a somewhat harder sell than was once thought.
“During the consultation process leading up to the auction, we received quite a bit of feedback about the importance of combining the digital dividend spectrum and the 2.5 GHz spectrum in the same auction,” an ACMA spokesperson told CommsDay. “This would indicate that capacity is becoming increasingly important to telcos.”
“Both [bands] are important,” said Telstra’s Wright. “In a country like Australia, low frequencies are still very important if you’re going to operate outside the five major capitals… [while] in dense populations and high-capacity areas, the 2.5GHz or other high frequencies make a lot of sense.”
Nevertheless, for the moment, the Commonwealth is still stuck with 2x15MHz of 700MHz – and must now decide what to do with it. “We intend to return it to the market in the next two or three years,” said Conroy. “The ACMA has previously stated that it should not be assumed any unsold spectrum would be returned to market in the short term, or at a price that is lower than the reserve price set for this auction.
“I endorse that as a sensible view and intend to provide the ACMA with a formal Direction that supports that approach, following public consultation.”
Optus Business has restructured for a renewed attack on the government and business market, integrating telecoms, ICT and applications expertise into a single organisation that will draw on SingTel Group Enterprise for regional strength.
And the division is also expanding is range of targets, revising its go-to-market model to better address the medium-sized business segment – which it sees as one of the fastest growing in Australia.
The realignment follows on from a process first kicked off a year ago, when the SingTel group as a whole restructured to help leverage its global scale and drive growth. Announced at the Optus Vision 2013 event by business MD John Paitaridis, the latest move will see Optus’ IT services arm Alphawest integrated into the Business division, and also align it with the Australian arm of NCS, a SingTel element specialising in applications.
“This business structure will have networking, managed services, mobility applications and cloud all under one roof: a truly integrated, end-to-end proposition, domestic and regional, with customer centricity at the heart of our strategy,” said Paitaridis. “Customers, in this converged world, don’t just talk to me about a network, or a mobile broadband plan, or a bit of bandwidth. Increasingly, they want our organisation to talk to them about how we solve business problems; how do you win by devices, by applications, by software, how do you wrap it up in a service.”
As part of the shakeup, Optus has also announced a ‘Centres of Excellence’ program which will focus the merged capabilities of Optus, Alphawest and ACS on six areas: business applications services, cloud and data centres, collaboration, contact centres, bring-your-own-device and machine-to-machine communications. “[These are] bets that we’re placing, where we’re investing… in terms of resource and in some cases capital,” said Paitaridis.
And, as SingTel Group Enterprise CEO Bill Chang explained, the transformation will also connect Optus Business fully with Group Enterprise’ formidable regional and global resources across fixed, mobile, cloud and applications. “The transformation that [Paitaridis] has done in Australia is a very important final move to integrate fully into Group Enterprise; to allow us to provide seamless capabilities right through the customer base in APAC,” he said. “We are deeply committed to this market in Australia… it’s a strategic market. We are reinforcing through [Paitaridis’] transformation of Optus Business, and we’re going to press it.”
“What we will do is ensure that Optus business is the true alternative, bringing choice to customers, putting that in the centre of whatever we do… as a group, to help drive innovation at business and industry level; and to bring our scale and cost competitiveness to enable the transformation, and do more for our customers here.”
Paitaridis noted that regional capability was increasingly emerging as a key point of differentiation.
“Increasingly, customers are saying ‘we don’t just want you to do it domestically, we want you to do it regionally’,” he said. “And… we can provide that same service and that same experience in Singapore, or across the APAC region, where we have footprint and presence. Indeed, we also have some capability for expansion into Europe and the US.”
MID-MARKET EXPANSION: Meanwhile, Optus Business will push harder into the mid-market. “There’s enormous potential in this mid-market segment, defined as anything up to 500 seats,” Paitaridis told CommsDay. “For us, it’s about fine-tuning our go-to-market model.”
“I think we were a bit one-dimensional; we had a direct sales force trying to serve that customer base. Over the last six to nine months, I’ve introduced a channel partner model to serve that customer base; I’ve also upped the ante on telephone account management as well, so we’ve got this multi-dimensional approach of direct selling, we’ve got our partners with us and selling into that space. We’ve always done that in the bottom end of the SME, but we’ve really brought that up now into the mid-market channel.”
“We’re also going deeper around capability; we’re introducing new services… midmarket partners are primarily domestic businesses with a high focus on mobility and ICT, selling Optus services and bundling with their own capability.”
The NBN has dominated discussions on government policy, almost to the total exclusion of other telecommunications initiatives.
Whilst the government has pursued its gold plated fixed line solution, Australia has become one of the world’s fastest adopters of smart phones. The mobile industry did this with little in the way of government intervention.
Some would argue that this is a prime example of how government involvement only slows progress. But Bill Morrow, CEO of Vodafone, says we will miss the longer term economic benefits if we don’t fix up our telecoms policies, recognising the importance of mobile in the communications mix.
In this week’s program you’ll hear him argue for the use of public subsidy for regional services that guarantees open access, whilst Chris Althaus, CEO of the Australian Mobile Telecommunications Association, describes the economic benefits derived from mobile usage.
We ask industry commentator Paul Budde and Greens Senator Scott Ludlam whether the government’s approach to broadband needs to be updated to take into account the mobile opportunity.
If Malcolm Turnbull sees fibre as the ultimate solution he will ensure his fibre to the node network is designed for what follows it.
We know deploying fibre to every home is complicated. The ACCC’s involvement in copper pull- throughs is an example of that. Commissioner Ed Willet helps explain in this week’s podcast just how many parties are involved when the only way to connect a home is to hook the fibre to the copper wire and pull it through the duct. It’s one example of why delivering such a vast network is a massive undertaking.
From that point of view the interim step of building a fibre to the node network might make sense. After all, it’s good enough for the British.
Andrew Ferguson, editor of thinkbroadband.co.uk, says there’s only a small proportion of evangelists demanding a full fibre solution.
For those who want fibre all the way they can choose fibre-on-demand – something included in the coalition’s proposal here. But the UK is only at trial stage and the cost is prohibitively expensive. The problem, says Benoit Felton from Diffraction Analysis, is that individual households will be paying a one-off truckroll and fibre circuit that would be shared with a full fibre deployment.
Popular legend has it that Stephen Conroy’s NBN policy was forged on the back of a beermat. This, of course, is an embellishment given that as early as March 11, 2008— more than a year before—Conroy had explicitly asked his new Expert Panel to consider both FTTH and FTTN in their assessment of proposals from industry for a national 12Mbps broadband network. What is true is that the final policy announcement, unusually, was effectively workshopped and finalised in an airborne conversation between Conroy and then PM Kevin Rudd.
Likewise, it could be said that Malcolm Turnbull’s policy—now a mere 8 days old—was forged on the back of a commercial airline napkin, albeit quite a few of them, and his ubiquitous iPad. There is no doubt that Turnbull’s policy is primarily influenced by the personal testimony of many FTTN and FTTH operators he has spoken to over the past two years in his travels across Asia, Europe and elsewhere.
Indeed, Malcolm Turnbull, with his extensive experience of both the media boardroom and the Cabinet room, can represent this policy as his own work. But Paul Fletcher, the Liberal MP with an extensive background as head of public affairs at Optus and adviser to former Liberal communications minister Richard Alston, also apparently played a major role in the policy’s development, particularly in its analysis and consideration of the finer points of the competition regime.
Oppositions notoriously lack the resources of governments. Just as Stephen Conroy’s 2007 FTTN policy owned much to a then 25 year old graduate student called Tim Watts (later to find great success as a Telstra regulatory executive and now an ALP candidate for a safe seat at the next federal election), Malcolm Turnbull’s policy adviser Stephen Ellis played a similar role in helping knock into shape the new Coalition broadband tract.
ROUNDED ADVICE: Ellis has an interesting background: an ANU economics graduate (like Conroy) who became a Fairfax political and business writer, then went to the US to study a masters degree at the Massachusetts Institute of Technology, ended up at McKinsey’s and then founded a Cambridge, Massachusetts data storage start-up, Permabit, which he exited in 2006. Returning to Australia he found himself working for Turnbull as Opposition leader, and now shadow comms minister.
Indeed, like Turnbull, Ellis has an unusual blend of technology, economics and business knowledge that is notably absent in many of the protagonists in the NBN debate.
With the policy finalised, Turnbull then convened his own informal variation of an expert panel: about a dozen or so people with telecom backgrounds across various disciplines such as financial analysis, economics and industry advocacy, seeking their opinions, which I understand were valuable mostly in refining the messaging of the policy.
Incredibly, not one of them gave into the temptation to hit the forward button on their emails and the policy remained under wraps until it was previewed to newspapers last Monday night.
Eight days on, how has the policy faired? A Fairfax poll rates it at 40% odd public support next to 60% for the existing NBN plan. This could probably be rated an interim win for Turnbull given four years and tens of millions of dollars of relentless television advertising and general advocacy for all things FTTH. If the recent flow of bad news regarding NBN delays and cost blowouts continues, Turnbull could probably expect to add a few percentage points to that polling over coming months.
Of course some sections of the technology media have attempted to blow holes in the Coalition policy. One persuasive criticism is that the policy does not count the future cost of annual copper maintenance.
OPEX, MAINTENANCE COSTS CONFLATED: One correspondent points to an alleged cost of $2 billion for this but appears to be incorporating all of Telstra’s retail customer acquisition and service costs, advertising, branding, switching, transmission and even office pot plant rentals as a “copper maintenance cost”. This is obviously ridiculous, the real cost is much less and in the zone of hundreds of millions, not billions. Nevertheless, the most expensive part of the copper network per capita is the section serving the last 7% of the population—it costs a few hundred million dollars a year to run. Under the existing NBN plan it is retained and funded separately through the TUSMA-led universal service arrangements. It’s running costs cannot be considered as a direct opex cost attributable to Turnbull’s NBN.
Ditto, the Turnbull NBN provides for FTTH for about a quarter of the remaining 93% footprint and replacement of copper with fibre for much of the loop length of the other 75%. It is highly fallacious to suggest that all this new fibre will do nought to reduce the extent of any faults and costs endemic to copper as a specific medium.
Where the Coalition made a mistake was not to talk more about upload speeds in its policy. Given that NBN advocates prefer to concentrate on the utterly asymmetrical 4K Ultra HDTV business case for FTTH these days (given many of their claims for e-health, video conferencing and so on have been torn apart), maybe this wasn’t so bad an omission. But it could be considered a mistake from the point of view that there is a reasonably good story for vectored DSL on this front.
VDSL specialist Assia tells me that vectored DSL upload speeds are rated at about 40% of the download speeds: so a minimum 25Mbps download speed, would be accompanied by a 10Mbps upload speed. Double that for 50Mbps which seems to be the average peak download speed Turnbull’s policy aims for.
This genuinely allows for and enables all those “social good” externalities involving NBN interactive video usages which we are told are so essential for the future.
There’s still much to be detail yet to come for the Coalition’s NBN policy before telcos can proceed to plan with some certainty. What will be done with the NBN’s current speed tier and connectivity virtual circuit pricing which disincents users from using the capacity the network is designed for?
What reasonable visibility can we have on a future NBN-Coalition government deal that cannot even be discussed before September? How will a Coalition government recast the structural issues in contracting and skills shortages which are afflicting the current rollout? Could they contract the FTTN and FTTH deployment job back to the most obviously suitable candidate—Telstra– despite the structural separation import of the overall policy?
One certainty is that the policy will evolve and change, a given since it will be subject to no less than three separate reviews post-election which could see it look more like or less like the current NBN depending on how the wind blows.
After all, just six years ago, Stephen Conroy went to an election promising a $4.7 billion contribution to a national FTTN network.
Two years later he promised up to $43 billion for a near-national FTTH network with significant private investment and to be completed in 8 years—or by 2017.
Four years later—halfway through this promised period—less than 2% of the network has been built, it has less than 15,000 customers connected and the government has now assumed 100% funding responsibility without any apparent spending cap. This simply isn’t sustainable.
The moral to this story is that change is the only constant, delay is the norm and almost all the arguments between the two competing NBNs over the next 150 days will be in vain because both of them will inevitably change post-election.
CommsDay Summit is over for another year but you can re-visit the powerpoints here.
Come back for more as we upload them
At the end of this month the spectrum made available by the switch off of analogue TVs goes up for sale. But has the government set too high a price?
Senator Stephen Conroy has determined the reserve price for the 700MHz spectrum at $1.36 per MHz pop. It’s more than double the rate paid for the 800 MHz spectrum in the UK recently, with many other European auctions falling even further below our local target.
Still, a high price could make sense. After all, there are only two bidders – Telstra and Optus. With each set a maximum allocation, basically they’ll each get as much as they want, provided they pay the reserve. If some of the spectrum goes unsold is it a bad thing? It just means the carriers bid again further down the track, when they need it.
In this week’s CommsDay CrossTalk podcast, we talk about the auction with independent telecoms analysts Chris Coughlan and Ovum’s David Kennedy.
We’ll also celebrate the 40th anniversary of the mobile phone. It was April 3rd 1973 when Martin Cooper, an engineer at Motorola, made the first call on a handheld device intended for regular users.
What does Australia’s telecoms industry think about the burning issues of the moment? NBN policy? Spectrum auctions?
Business and economic conditions? Have your say as a leading member of the industry in the 2013 edition of the CommsDay Industry Pulse. Completing the questions takes less than 3 minutes with full results to be released at the CommsDay Annual Dinner, sponsored by Tata Consultancy Services, at the Westin Hotel, Sydney on Tuesday April 9. Voting closes midday Friday 5 April and is anonymous.